CANDLEWOOD
OFFICE CENTER
2600 TROY CENTER DRIVE
TROY, MICHIGAN
KIRTS
OFFICE CENTER ASSOCIATES, L.L.C.
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Section
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Page
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Basic Lease
Terms and Provisions
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1
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Premises
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2
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Contingency for
Lender Approval/Term
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3
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Rent
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7
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Operating
Expenses
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8
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Character of
Occupancy
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10
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Services and
Utilities
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11
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Quiet
Enjoyment
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12
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Maintenance and
Repairs
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12
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Alterations and
Additions
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13
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Entry by
Landlord
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14
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Construction
Liens
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14
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Damage to
Property, Injury to Persons
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15
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Insurance
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16
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Damage or
Destruction to Building
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17
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Condemnation
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17
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Assignment and
Subletting
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18
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Estoppel
Certificate
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19
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Default
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19
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Completion of
Premises
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23
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Removal of
Tenant's Property
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25
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Holding
Over
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26
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Parking
Areas
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26
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Surrender and
Notice
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26
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Acceptance of
Premises by Tenant
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26
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Subordination
and Attornment
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26
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Payments after
Termination
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28
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Authorities for
Action and Notice
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28
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Security
Deposit
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29
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Liability of
Landlord
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29
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Brokerage
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29
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Signage
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29
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Name of
Building Project
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29
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Area of
Premises
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30
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Furnishing of
Financial Statements
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30
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Miscellaneous
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30
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Representations
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32
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Environmental
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33
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Consent
Judgment and Condominium
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33
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Exhibit
A
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Site Plan/Location of Premises
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Exhibit
B
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Exhibit
C
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Schedule
1
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Legal Description of the Building
Complex
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CANDLEWOOD
OFFICE CENTER
TROY, MICHIGAN
THIS
LEASE is made this 22 nd
day of
July, 2009, between KIRTS OFFICE CENTER ASSOCIATES, L.L.C., a
Michigan limited liability company, (“Landlord”), whose
address is Columbia Center, 101 W. Big Beaver Road, Suite 200,
Troy, Ml 48084, and SOMANETICS CORPORATION, a Michigan corporation
(“Tenant”) whose address is 1653 East Maple Road, Troy,
Michigan 48083.
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1.
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Basic Lease Terms and
Provisions:
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The
following is intended to summarize the principal terms of this
Lease, but is not intended to be all inclusive. In the event that
anything contained in this Paragraph 1 conflicts with other
provisions hereinafter contained in this Lease, the latter shall be
deemed to control in the absence of express statements to the
contrary.
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A.
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Building: Candlewood Office
Center
2600
Troy Center Drive
Troy,
Michigan
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B.
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Leased Premises or Premises:
Consisting of all of Unit 2 of the Candlewood Hotel/Office Center
Condominium including the Building located thereon, comprising
approximately Forty-seven Thousand Eight Hundred Sixty-eight
(47,868) rentable square feet, and any adjacent lawn area or
parking areas (equal to approximately 204 parking spaces on the
date hereof) included in such Unit (and the right to use all
parking spaces granted to the Landlord under that certain Parking
Easement Agreement dated September 25, 1997 recorded at Liber
17955, Page 513, Oakland County Records, as amended by that certain
First Amendment to Parking easement Agreement dated April 20,
1998 recorded at Liber 18576, Page 592 Oakland County Records (the
“Parking Easement”)).
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C.
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Term: Eighty-seven (87) full
calendar months and one partial month (December, 2009) commencing
upon December 15, 2009 (the “Commencement Date”),
and terminating the last day of the eighty-seventh full calendar
month after the Commencement Date (“Termination Date”),
all subject to the terms of Paragraph 20 of the
Lease.
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D.
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Base Rent:
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1
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Annual Per
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Square Foot
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Period
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Monthly
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Annually
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Rental Rate
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Commencement Date through the 15
th full calendar month after the Commencement
Date:
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$
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36,898.25
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$
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442,779.00
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$
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9.25
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Months 16-27 after the month in which the
Commencment Date occurs:
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$
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37,815.72
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$
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453,788.64
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$
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9.48
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Months 28-39 after the month in which the
Commencment Date occurs:
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$
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38,773.08
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$
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465,276.96
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$
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9.72
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Months 40-51 after the month in which the
Commencment Date occurs:
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$
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39,730.44
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$
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476,765.28
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$
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9.96
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Months 52-63 after the month in which the
Commencment Date occurs:
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$
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40.727.69
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$
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488.732.28
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$
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10.21
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Months 64-75 after the month in which the
Commencment Date occurs:
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$
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41,764.83
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$
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501,177.96
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$
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10.47
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Months 76-87 after the month in which the
Commencment Date occurs:
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$
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42,801.97
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$
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513,623.64
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$
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10.73
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E.
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Operating Expenses: Tenant is
responsible for all of the Operating Expenses of the Premises and
the Building and the Premises’ pro rata share, if any, of the
expenses of the Building Complex as such terms are defined
herein.
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F.
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Use: Office use, assembly and
packaging, engineering, research, medical equipment testing,
development, marketing, sales, finance, administration, product
service, storage, shipping and receiving and all other uses
permitted by the City of Troy and applicable law.
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G.
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Maximum Occupancy [Intentionally
Deleted]
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H.
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Security Deposit: [Intentionally
Deleted]
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I.
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Broker: Whitehall Realty Company, CB
Richard Ellis and Kirco Management Services, Ltd.
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J.
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Building Complex: All of the land
and improvements included within the Candlewood Hotel/Office Center
Condominium.
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Landlord
hereby leases to Tenant those certain premises designated on the
Plan attached hereto as Exhibit “A” (the
“Premises”), as more particularly defined in
subparagraph B of Paragraph 1 hereof, together with:
(i) an exclusive right to use, subject to the provisions
hereof, and that certain Master Deed for Candlewood Hotel/Office
Center Condominium recorded at Liber 17654, Page 812 with the
Oakland County, Michigan Register of Deeds (the “Master
Deed”), all appurtenances thereunto, including but not
limited to, all limited and general common elements benefiting Unit
2, including parking areas; and (ii) the rights of the
Landlord under the Parking Easement. This Lease is subject to the
terms, covenants and conditions set forth herein and Tenant and
Landlord each covenant as a material part of the consideration for
this Lease to keep and perform each and all of said terms,
covenants and conditions by it to be
2
kept and
performed and that this Lease is made upon the condition of such
performance. Except as expressly set forth herein, Tenant agrees to
accept the Premises in their “AS IS” “WHERE
IS” physical condition and “WITH ALL FAULTS” with
out any agreements, representations or obligations on the part of
Landlord as to the condition of the Premises or
Building.
Notwithstanding
anything to the contrary contained in this Lease, if the
Landlord’s construction work to make the Premises Ready for
Occupancy shall contain latent defects discovered within one
(1) year from the Commencement Date, or one (1) year
after completion thereof, if later, Tenant shall report such latent
defects to Landlord, whereupon Landlord shall make reasonable
commercial efforts to cause the contractor performing such work to
correct such defect. Landlord shall also obtain, to the extent any
personal property is purchased and installed in the Premises in
connection with such construction, all manufacturers’
warranties in connection with such personal property and shall make
reasonable commercial efforts to cause any defects thereto to be
repaired pursuant to such warranties.
Provided
Tenant is not in default under the Lease beyond any applicable
grace or cure period, Tenant or a Permitted Assignee (as
hereinafter defined), but not any other assignee or sublessee, this
right being personal to the original Tenant and a Permitted
Assignee, shall have the right to expand the Premises (the
“Expansion”) subject to the following conditions:
(i) Tenant and Landlord shall work collaboratively to provide
plans and specifications reasonably acceptable to Landlord and
Tenant; (ii) the party performing such construction work shall
be able to obtain any and all necessary consents or approvals for
construction of the improvements; (iii) all such improvements
shall comply in all respects with all applicable laws and
ordinances; (iv) if Landlord is performing the work, Kirco
Manix Construction, LLC, or an affiliate of Landlord, shall be
retained as the general contractor or to provide construction
management services at its then prevailing rates; (v) the
party performing such work shall provide lien waivers and title
insurance coverage as such construction progresses; and
(vi) if the Tenant is the party performing such work, Tenant
shall comply with all other requirements of this Lease relating to
Alterations, as set forth in Article 10 hereof, with regard to
such Expansion. The Base Rent, any increases thereto and the timing
of the construction of the Expansion shall be agreed upon between
Landlord and Tenant as set forth below.
Tenant
shall notify Landlord of its desire to have the Expansion built,
which notice shall include the approximate parameters of the
desired Expansion, including the approximate square footage and
location of the Expansion. The parties shall negotiate, in good
faith, within ninety (90) days after Landlord’s receipt
of Tenant’s notice, the Base Rent for the Expansion,
including any increases thereto; the timing of the construction of
the Expansion; and all other matters; and Landlord shall determine
the availability of equity for, and the availability and rates of
financing of, the construction of such Expansion. In the event that
the parties fail to agree upon the terms and conditions of the
construction and leasing of the Expansion within such ninety (90)
day period, Tenant shall have the right to proceed to construct the
Expansion, at its sole cost and expense, pursuant to the terms and
conditions set forth in the immediately preceding paragraph and the
other provisions of this Lease relating to Alterations, except that
Tenant shall select the general contractor or construction manager
who will be undertaking the work, subject to Landlord’s
consent which shall not be unreasonably withheld, delayed or
conditioned. Notwithstanding the foregoing, if Tenant constructs
the Expansion, as set forth in the preceding sentence, Kirco Manix
Construction, LLC, or an affiliate of Landlord, shall have the
right to bid on the construction work. If the Tenant constructs the
Expansion, at its sole cost and expense, the Base Rent shall not be
increased as a result of the construction of the Expansion. The
parties shall execute and deliver an amendment to this Lease
consistent with the foregoing prior to the construction of the
Expansion in form and substance reasonably satisfactory to Landlord
and Tenant. Neither Landlord nor Tenant shall be obligated to pay
any additional brokerage commission in connection with the leasing
of the Expansion except if Tenant has engaged Whitehall Realty
Company dba Whitehall Real Estates Interests
(“Whitehall”) to represent Tenant in connection with
such Expansion, and Whitehall takes an active part in such
negotiations, Landlord shall be obligated to pay Whitehall a
brokerage commission pursuant to a separate Registration and
Commission Agreement between Landlord and Whitehall dated
April 29, 2009.
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3.
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Contingency for Lender
Approval/Term:
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(a)
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It
is acknowledged that this Lease is subject to, and the following
items are conditions precedent to, the Landlord’s obligations
under this Lease: (i) the approval of the existing mortgagee
of the Premises as of the date hereof, Flagstar Bank, successor in
interest to Metropolitan Realty Company, L.L.C.
(“Flagstar”) to the terms and conditions of this
Lease
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(“Lender Lease
Approval”); and (ii) the closing of a modification of
the loan secured by the Premises between Landlord and Flagstar
(“Loan Closing”). Landlord shall make reasonable
commercial efforts promptly after execution of this Lease, to
obtain Lender Lease Approval and to cause the Loan Closing to
occur. Landlord shall notify Tenant when it has obtained Lender
Lease Approval and/or Loan Closing and, shall further provide a
Schedule of Construction for Tenant’s review and approval, if
different from Exhibit C attached hereto. Upon Landlord and
Tenant agreeing upon a Schedule of Construction, if different from
Exhibit C attached hereto, the parties shall execute a side
letter agreement containing such schedule which shall replace
Exhibit C attached hereto. In the event that Lender Lease
Approval and Loan Closing do not occur within thirty (30) days
after the date of the full execution of this Lease, Landlord shall
have the right to terminate this Lease by written notice to Tenant
within five (5) business days after the expiration of such
thirty (30) day period.
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(b)
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The
term of this Lease shall be for the period referred to in
subparagraph C of Paragraph 1 hereof (the “Primary Lease
Term”) commencing at 12:01 a.m. on the Commencement
Date, and terminating at 12:00 midnight on the Termination Date,
unless sooner terminated pursuant to this Lease.
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(c)
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If
the Term begins on a day other than on the first day of the month,
Tenant shall pay proportionate rent at the same monthly rate as set
forth in Paragraph 1.D. hereof (also in advance) for such
partial month and the abatement provided below will apply and all
other terms and conditions of this Lease shall be in force and
effect during such partial month. In the event Landlord fails to
deliver the Premises on the Commencement Date because the Premises
are not then Ready for Occupancy (as hereinafter defined) or for
any other cause beyond Landlord’s control, except as
otherwise provided herein, Landlord shall not be liable to Tenant
for any damages as a result of Landlord’s delay in delivering
the Premises and the Commencement Date shall be postponed until
such date as the Premises are Ready for Occupancy and the
Termination Date shall be postponed for a like number of days. Upon
delivery of the Premises ready for Occupancy the parties agree to
enter into a Supplement to Lease or a Suite Acceptance Letter
which shall stipulate the Commencement Date and Termination Date of
this Lease.
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Notwithstanding the foregoing,
should the Commencement Date not have occurred on or before
December 15, 2009, subject to (aa) an extension of one
day for each day beyond the date Tenant is required to respond to
Landlord’s plans pursuant to Paragraph 20 hereof that
Tenant fails to so respond, (bb) extension for any delays in the
Premises being Ready for Occupancy due to the acts or omissions of
Tenant, or its subtenants, assignees, and their respective
partners, stockholders, members, directors, officers, agents,
employees, contractors, clients, customers and invitees
(collectively “Tenant’s Parties”), and
(cc) exension for any force majeure events (as maybe extended,
the “Proposed Delivery Date”), Tenant shall receive a
credit against Base Rent in the amount equal to: (i) Five
Hundred Dollars ($500) per day for each of the first thirty-one
(31) days between the Proposed Delivery Date and the
Commencement Date when the Commencement Date does not occur;
(ii) Seven Hundred and Fifty Dollars ($750) per day for each
of the next thirty-one (31) days (days 32-62) between the
Proposed Delivery Date and the Commencement Date for when the
Commencement Date does not occur; and (iii) One Thousand Five
Hundred Dollars ($1,500) per day for each of the next thirty
(30) days (days 63-92) between the Proposed Delivery Date and
the Commencement Date for when the Commencement Date does not
occur.
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Subject to (aa) an extension of
one day for each day beyond the date Tenant is required to respond
to Landlord’s plans pursuant to Paragraph 20 hereof that
Tenant fails to so respond, (bb) extension for any delays in
the Premises being Ready for Occupancy due to the acts or omissions
of Tenant’s Parties, and (cc) extension for any force
majeure events, if the Premises are not Ready for Occupancy on or
before February 1, 2010 (as such date may be so extended, the
“Outside Delivery Date”), then Tenant
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shall have the
option, on Landlord’s behalf, to perform or cause to be
performed the construction work required to make the Premises Ready
for Occupancy by providing written notice to Landlord within ten
(10) business days after the Outside Delivery Date. Should
Tenant not deliver such written notice to Landlord within the 10
business day period specified above, Tenant irrevocably shall have
waived its right to perform such construction work under this
paragraph. Should Landlord make the Premises Ready for Occupancy
within ten (10) business days after receipt of Tenant’s
notice hereunder, then Tenant’s election to exercise its
self-help right hereunder automatically shall be null and void,
Tenant shall occupy the Premises and the Commencement Date shall be
deemed to have occurred.
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In
the event that Tenant performs the Landlord’s construction
work required to make the Premises Ready for Occupancy pusuant to
the foregoing paragraph Tenant shall be entitled to recover from
Landlord Tenant’s reasonable costs and expenses in connection
with the exercise of such right. Tenant shall provide an invoice
with reasonable supporting documentation and Landlord shall pay
Tenant for such costs within thirty (30) days after receipt of
such invoice.
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The
rent credits and the self-help remedy specified above shall be
Tenant’s sole and exclusive remedies against Landlord for its
failure to complete the Premises on a timely basis and deliver the
Premises Ready for Occupancy to Tenant. In recognition that
Landlord must make payments under its mortgage of the Premises,
Tenant agrees that the credit against Base Rent may not exceed more
than twenty-five percent (25%) of the Base Rent in any month during
the Term.
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Provided that Tenant does not
interfere with the Landlord’s work in preparing the Premises
to be Ready for Occupancy, Landlord hereby grants to Tenant a
license to access the Premises prior to the Commencement Date to
allow Tenant to prepare the Premises for Tenant’s use and
occupancy, including the installation of Tenant’s equipment,
improvements, inventory and personal property and all other work
deemed necessary or desirable by Tenant to open and operate the
Premises, (collectively “Tenant’s FF&E”), for
a period of thirty (30) days prior to the Commencement Date
subject to such reasonable conditions as Landlord may deem
necessary, including Tenant obtaining all insurance required to be
obtained under the terms hereof.
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(d)
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Subject to Tenant not being in
default of this Lease beyond any applicable grace or cure period at
the time it notifies Landlord of its desire to renew through and
including the execution of a lease amendment providing for such
renewal, Tenant or a Permitted Assignee, but not any other assignee
or sublessee, this right being personal to the original Tenant and
a Permitted Assignee, shall have two (2) consecutive options
to renew this Lease (the “Renewal Option(s)”) for a
term of five (5) years each for all, but not less than all, of
the Premises (the “Renewal Term(s)”) as may be expanded
hereunder, commencing on the day after the Expiration Date or the
expiration of the first Renewal Term, as applicable, and expiring
on the date which is five (5) years thereafter, on the same
terms and conditions as set forth herein except that the Base Rent
for the relevant Renewal Term shall be the amount agreed upon by
the parties pursuant to the terms and conditions set forth in this
Section 3(d).
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In
order to exercise a Renewal Option, Tenant must deliver to Landlord
written notice of exercise no earlier than twelve (12) months
and no later than nine (9) months prior to the Expiration Date
or the expiration of the previous Renewal Term, as
applicable.
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Within ninety (90) days after
receipt of notice that Tenant desires to exercise a Renewal Option,
the parties shall negotiate, in good faith, the Base Rent for the
Renewal Term and any annual increases to the same. In the event
that the parties fail to agree upon the the Base Rent for the
Renewal Term and any annual increases to the same within such
ninety (90) days after Tenant’s receipt of
Landlord’s notice, Tenant’s notice of election to
extend the term shall be null and void and of no force or
effect.
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In
the event Tenant exercises one or more of the Renewal Options in
strict accordance with the terms hereof, Tenant shall execute and
deliver an amendment to this Lease consistent with the foregoing
within thirty (30) days after receipt by Tenant of the subject
lease amendment in form and substance reasonably satisfactory to
Landlord.
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Landlord shall not perform any
leasehold improvements in connection with the exercise of any
Renewal Options and the Tenant agrees to accept the Premises in its
then “AS IS” “WHERE IS” condition and
“WITH ALL FAULTS” on the commencement date of the
relevant Renewal Term, and Tenant shall not be entitled to any
credit or allowance or other economic concession from Landlord for
the improvement thereof or otherwise. Neither Landlord nor Tenant
shall be obligated to pay any additional brokerage commission in
connection with the Renewal Options except if Tenant has engaged
Whitehall to represent Tenant in connection with such Renewal
Options, and Whitehall takes an active part in such negotiations,
Landlord shall be obligated to pay Whitehall a brokerage commission
pursuant to a separate Registration and Commission Agreement
between Landlord and Whitehall dated April 29,
2009.
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Tenant shall have no further options
to renew the Term beyond the expiration date of the second Renewal
Term. The Renewal Options herein granted shall automatically
terminate and become null and void and of no force or effect upon
the occurrence of any of the following: (1) Tenant
either has been or is then currently in default under this Lease
beyond any applicable grace or cure period, (2) the
early termination of this Lease has been exercised by Landlord or
Tenant, (3) the assignment of this Lease by Tenant,
or the sublease by Tenant of the Premises, or any part thereof,
except for an assignment of this Lease by Tenant to a Permitted
Assignee, (4) the failure of Tenant to timely or
properly exercise the applicable Renewal Option in strict
accordance with the terms of this Paragraph, or (5)
in the case of the exercise of the second Renewal Option, the
failure of Tenant to timely or properly exercise the previous
Renewal Option in strict accordance with the terms of this
Paragraph.
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(e)
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On
the last day of the seventy-fifth (75 th ) full calendar month of the Term
(the “Early Termination Date”), Tenant or a Permitted
Assignee, but not any other assignee or sublessee, this right being
personal to the original Tenant and a Permitted Assignee, shall
have the one time option (the “Termination Option”) to
terminate this Lease by providing written notice to Landlord not
more than twelve (12) full calendar months and not less than
nine (9) full calendar months prior to the Early Termination
Date. Tenant’s Termination Option is conditioned upon
Tenant’s compliance with all of the following terms and
conditions: (i) Tenant is not in default, nor has been in
default beyond any applicable grace or cure period, on the date
Tenant exercises the Termination Option, or at any time prior to
the Early Termination Date; and (ii) Tenant pays to the
Landlord, concurrently with Tenant’s notice to exercise the
Termination Option, a termination fee equal to the unamortized
cost, on a straight line basis over the entire Term of the cost of
the Allowance and brokerage fees paid by Landlord plus the Base
Rent due for the first two (2) months after the Early
Termination Date (the “Termination Fee”). The parties
acknowledge that the Landlord’s damages as a result of such
early termination are difficult or impossible to measure and it is
agreed that the Termination Fee is the parties’ reasonable
estimate of such damages and shall be deemed to be liquidated
damages and not a penalty to Tenant. It is agreed between Tenant
and Landlord that the Termination Fee shall not limit
Tenant’s requirement to comply with all other obligations
under the Lease. If Tenant does not notify Landlord of its election
to exercise the Termination Option, Tenant will be deemed to have
forever waived its Termination Option and, if so requested by
Landlord, Tenant shall execute an amendment to lease deleting the
Termination Option.
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In
the event Tenant timely and properly exercises the Termination
Option, the Lease Term shall terminate effective as of the Early
Termination Date. Rent shall be paid through and apportioned as of
the Early Termination
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Date, and
neither Landlord nor Tenant shall have any rights, estates,
liabilities or obligations accruing under the Lease after the Early
Termination Date, except such rights and liabilities which, by the
terms of the Lease are obligations of the Tenant or Landlord which
survive the expiration of the Lease Term. The Termination Option
shall automatically terminate and become null and void upon any one
of the following: (a) the failure of Tenant to timely or
properly exercise the Termination Option and pay the Termination
Fee in strict accordance with the terms of this Section; or
(b) Tenant is, or has been, in default under this Lease beyond
any applicable grace or cure period. In the event that Tenant
validly exercises the Termination Option but does not vacate the
Premises on or before the Early Termination Date such tenancy shall
be deemed to be a holdover tenancy under the terms of the
Lease.
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Tenant
shall pay to Landlord, as Base Rent for the Premises, the rental
set forth in subparagraph D of Paragraph 1 hereof. Rent for
the first month of the term hereof shall be prorated based upon the
number of days during said month that the Lease Term was in effect.
All other rent shall be payable on the first day of each calendar
month during the term hereof. All such rent shall be paid in
advance without notice, abatement, demand, deduction or offset at
the office of the Landlord or to such other place as Landlord may
designate in writing. It is the understanding of the parties that
the Base Rent is to be absolutely “net” to the Landlord
and, except as otherwise expressly provided herein, Tenant shall
bear all costs and expenses of whatever kind relating to the
Premises, the Building and the Premises’ pro rata share, if
any, of the expenses of the Building Complex.
Notwithstanding
the foregoing, Base Rent shall abate for the first three
(3) months of the Term (the “Abated Rent”) and if
the Commencement Date is other than the first day of a month the
Abated Rent shall apply to the Base Rent as prorated for that month
and the remaining days of the first month abatement shall be
applied to reduce the payment due for the third month of the term
so that Tenant has a total of three full months of Abated Rent. The
abatement of Base Rent provided herein shall not relieve Tenant
from the performance of Tenant’s other obligations under this
Lease, including, without limation, the obligation to pay on a
timely basis Operating Expenses, as hereinafter defined, and all
other additional rent and other obligations under this Lease, which
shall become due and payable during the entire Term. In the event
of Tenant’s default hereunder, the entire amount of the
Abated Rent shall become immediately due and payable and Tenant
shall, upon demand of Landlord, immediately pay to Landlord the
amount of the Abated Rent. All amounts payable to Landlord under
this Lease, including without limitation Base Rent, shall be paid
by Tenant to Landlord at the address shown above, or such other
place as Landlord may designate in writing from time to
time.
In
the event Tenant shall fail to pay, when the same is due and
payable, any installment of the Base Rent or any additional rent to
be paid by Tenant to Landlord under the terms of this Lease, then
at Landlord’s election to do so, such unpaid amounts shall
bear interest from the due date thereof to the date of payment at
the rate of two percent (2%) per annum in excess of the prime or
base rate set by JP Morgan Chase Bank, or its successor, as such
rate is increased or decreased, from time to time (the
“Default Rate”). In any event, however, Tenant shall be
charged a service charge with respect to each monthly installment
of rental not received by the due date for said installment. Such
service charge shall reimburse Landlord for the additional
administrative expenses incurred by Landlord in connection with the
collection of such late installment of monthly rental. The service
charge shall be the greater of five percent (5%) of the amount over
due or unpaid or Fifty and Dollars ($50.00) for any rental not paid
by the seventh (7 th
) day of
the month. Any interest and service charge to be paid by Tenant
pursuant to the foregoing provisions shall be paid along with the
next scheduled installment of Base Rent without any additional
notice whatsoever.
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(a)
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“Operating Expenses”
shall:
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Mean all operating expenses of any
kind or nature with respect to the Premises and the Building and
the Premises’ pro rata share, if any, of the expenses of the
Building Complex as determined in accordance with generally
accepted accounting principles and shall include, but not be
limited to, all general and special real estate or ad valorem taxes
or general or special assessments (which shall be limited to
installments falling due during the Term), sewer rents and charges
levied against the Premises by any governmental or
quasi-governmental authority or any taxes or assessments which
shall be levied on the Premises in lieu of or in addition to all or
any portion of any such real estate taxes or assessments, or which
shall be levied on the rentals of the Premises (other than
Landlord’s income taxes), but in this case, the computation
shall be made as if this were Landlord’s only building, or
which shall be levied on Landlord as a result of the use, ownership
or operation of the Premises; the cost of Premises supplies; costs
incurred in connection with all energy sources for the common areas
of the Building Complex; janitorial services; general maintenance
and normal repair of the Premises, including the heating and air
conditioning systems of the Building, landscaping maintenance,
maintenance, repair, striping and replacement of all parking areas
(except for the work that Landlord has agreed to undertake in this
Lease, at its sole cost and expense, prior to the Commencement
Date, as set forth in Paragraph 20 hereof); association
assessments or condominium assessments of the Building Complex
allocated to the Premises pursuant to the Master Deed; the costs of
rubbish removal, snow removal and service contracts for the HVAC
systems of the Building; the cost to repair, alter, remove,
reconstruct or improve any part of the Premises as required by
governmental requirements in the form of laws, ordinances,
regulations, or otherwise enacted or amended after the date hereof;
the cost of general maintenance and normal repair of the Premises;
insurance in amounts and coverage determined by Landlord or its
mortgagee, including fire and extended coverage, rental
interruption, sprinkler leakage, plate glass and public liability
insurance (but Tenant shall have no interest in such insurance or
the proceeds thereof except that Operating Expenses shall not
include expenses reimbursed under such policies); labor costs
incurred in the operation and maintenance of the Premises,
including wages and other payments, costs to Landlord of
Workers’ Compensation and disability insurance, payroll
taxes, and welfare fringe benefits for employees directly
associated with operating the Building; professional building
management fees; legal, accounting, inspection and consultation
fees incurred in connection with the Premises or any other
inspection or consultation fees required for the normal prudent
operation of the Premises; the cost of any capital improvements to
the Premises or of any machinery or equipment installed in the
Premises amortized over the useful life of such item as determined
under the Internal Revenue Code, as reasonably agreed by
Landlord’s and Tenant’s accountant or chief financial
officers, as applicable, plus interest at five percent (5%) of such
amortized amount; the common area costs of the Building Complex;
and all other charges properly allocable to the repair, operation
and maintenance of the Premises in accordance with generally
accepted accounting principles.
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Operating Expenses will not
include:
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(a)
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Replacement of the Building’s
roof, walls and foundation;
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(b)
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Depreciation on the Building Complex
or any areas within it;
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(c)
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Ground lease payments, mortgage
principal, interest, penalties and charges, financing and
refinancing costs and expenses;
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(d)
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Costs of replacements to
Landlord’s personal property and equipment;
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(e)
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The
cost of repairs or replacements due to casualty or condemnation
that are reimbursed by third parties;
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(f)
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Any
cost or expense due to Landlord’s breach of this Lease
provided that Tenant has timely paid and performed its obligations
under this Lease relating to such item;
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(g)
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Any
income, estate, inheritance, or other transfer tax and any excess
profit, franchise, or similar taxes on Landlord’s business,
except as provided above and any increases in real property taxes
resulting from the sale or transfer of the Premises by
Landlord;
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(h)
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All
costs and expenses (including lease concessions and allowances),
including legal fees, relating to activities for the solicitation
and execution of leases of space in the Building;
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(i)
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Any
cost or expense related to removal, cleaning, abatement or
remediation of “hazardous material” not directly caused
by Tenant and which is not done in the ordinary course of business
on the Premises (e.g., cleanup of accidentally spilled paint as
opposed to cleanup of hazardous substances which are in quantities
which violate environmental laws); and
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(j)
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Costs to correct construction
defects and latent defects of Landlord’s construction work to
make the Premises Ready for Occupancy within within one
(1) year from the Commencement Date, or one (1) year
after completion of such item, if later, which have been reimbursed
to the Landlord pursuant to third-party warranties.
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If
Landlord selects an accrual accounting basis for calculating
Operating Expenses, Operating Expenses shall be deemed to have been
paid when such expenses have accrued in accordance with generally
accepted accounting principles.
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(b)
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It
is hereby agreed that during the Term hereof, Tenant shall pay to
Landlord the Operating Expenses. At least thirty (30) days
prior to the Commencment Date, Landlord shall notify Tenant of
Landlord’s estimate of the amount of the Operating Expenses
for the remainder of the calendar year in which the Commencement
Date occurs. Beginning with the Commencement Date, the monthly rent
to be paid by Tenant to Landlord shall be increased by an amount
equal to the estimated amount of Operating Expenses for such year
divided by the number of months remaining in the calendar year in
which the Commencement Date occurs, with an adjustment to be made
between the parties at a later date as hereinafter provided. At
least thirty (30) days prior to the commencment of the first
full calendar year of the Term and each other calendar year
thereafter, Landlord shall provide a budget for the Operating
Expenses of the Premises for Tenant’s review, which shall
specify any anticipated capital expenditures during the following
year in excess of $10,000. In the event that Tenant objects to all
or any part of the budget, Tenant shall notify Landlord within
thirty (30) days after receipt thereof and the parties shall
meet and attempt to resolve any issues. Failure of Tenant to notify
Landlord within such thirty-day period shall be deemed to be
Tenant’s approval of such budget. Beginning with the first
full calendar year of the Term, the monthly rent to be paid by
Tenant to Landlord shall be increased by an amount equal to 1/12th
of the estimated amount of the Operating Expenses for such calendar
year, with an adjustment to be made between the parties at a later
date as hereinafter provided. Landlord may, by written notice to
Tenant, from time to time, revise its estimate for any year, and
subsequent payments by Tenant for such year shall be based upon
such revised estimate. As soon as practicable following the end of
each calendar year during the Term of this Lease, Landlord shall
submit to Tenant a statement setting forth the amount of the actual
Operating Expenses, and the amount actually paid by Tenant as
Operating Expenses, and the difference, if any, between the
actual
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Operating
Expenses for the calendar year just completed and the estimated
amount of Operating Expenses (on which its rent was based) and
which was paid by Tenant for such year and, if Tenant has not paid
the full amount of actual Operating Expenses, the balance due shall
be paid by Tenant to Landlord within thirty (30) days after
Tenant’s receipt of such statement. In the event that the
actual Operating Expenses for the calendar year just completed was
less than the estimated amount of the Operating Expenses (on which
its rent was based) and which was paid by Tenant for such year
Landlord shall give a credit to Tenant in such amount, against the
next payment of Operating Expenses due hereunder. In addition, with
respect to the monthly rent, until Tenant receives Landlord’s
estimate for the new calendar year Tenant’s monthly rent for
the new calendar year shall continue to be paid at the then current
rate, but Tenant shall commence payment to Landlord of the monthly
installments of rent on the basis of the new estimate beginning on
the first day of the month following the month in which Tenant
receives such statement.
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(c)
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If
Tenant occupies the Premises for less than a full calendar year
during the first or last calendar years of the term hereof,
Operating Expenses for such partial year shall be the actual
Operating Expenses for such period and Tenant shall make payments
based upon the Landlord’s estimates as provided above. At the
end of such period, the Landlord shall provide a statement which
shall compare the amounts paid by Tenant to the actual Operating
Expenses for the period just completed and Tenant shall pay any
additional sums due, or Landlord shall refund to Tenant, if the
Term has expired, any sums due the other hereunder using the same
method set forth above.
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(d)
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Landlord’s failure during the
Lease Term to prepare and deliver any statements or bills, or
Landlord’s failure to make a demand under this Paragraph or
under any provision of this Lease shall not in any way be deemed to
be a waiver of, or cause Landlord to forfeit or surrender, its
rights to collect any items of additional rent which may have
become due pursuant to this Paragraph during the Term of this
Lease, except as otherwise specifically set forth in this Lease.
Tenant’s liability for all additional rent due under this
Paragraph 5 shall survive the expiration or earlier
termination of this Lease.
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(e)
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The
Building shall be maintained in good order, condition and repair,
ordinary wear and tear excepted, in the manner consistent with
comparable corporate headquarters in Troy, Michigan.
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6.
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Character of
Occupancy:
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(a)
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The
Premises are to be used only for those purposes set forth in
subparagraph F of Paragraph 1 hereof and no other use. Except
for the Special Use Approval, which Landlord has obtained and paid
the expenses relating thereto, Tenant shall, at its sole cost and
expense, obtain all governmental licenses and permits required to
allow Tenant to conduct Tenant’s Use. The parties acknowledge
that a special use permit for the Premises was adopted by the City
of Troy pursuant to Resolution PC-2009-06-051 (the “Special
Use Approval”). Tenant agrees to comply with all applicable
laws in connection with its use of the Premises including, without
limitation, the foregoing Special Use Approval.
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(b)
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Tenant shall not suffer nor permit
the Premises nor any part thereof to be used in any manner, nor
anything to be done therein, nor suffer or permit anything to be
brought into or kept therein, which would in any way (i) make
void or voidable any fire or liability insurance policy then in
force with respect to the Building; (ii) make unobtainable
from reputable insurance companies authorized to do business in
Michigan any fire insurance with extended coverage, or liability,
boiler or other insurance required to be furnished by Landlord
under the terms of any lease or mortgage to which this Lease is
subordinate at standard rates provided Tenant is not deprived of
its intended use of the Premises; (iii) cause or in
Landlord’s reasonable opinion be likely to cause physical
damage to the
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Building or any part thereof;
(iv) constitute a public or private nuisance; (v) impair,
in the reasonable opinion of Landlord, the appearance, character or
reputation of the Building; (vi) discharge objectionable
fumes, vapors or odors into the Building air conditioning system or
into the Building flues or vents not designed to receive them;
(vii) impair or interfere with any of the Building services;
or (viii) constitute waste.
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(c)
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Tenant shall not use the Premises
nor permit anything to be done in or about the Premises which will
in any way conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter
enacted or promulgated. Tenant shall give prompt notice to Landlord
of any notice it receives of the violation of any law or
requirement of any public authority with respect to the Premises or
the use or occupation thereof. Landlord shall give prompt notice to
Tenant of any notice it receives relative to the violation by
Tenant of any law or requirement of any public authority with
respect to the Premises or the use or occupation thereof. Further,
Tenant shall not use the Premises or permit anything to be done on
or about the Premises which will in any way conflict with or
violate any private covenant, condition, or restriction recorded
against the Building Complex, including, without limitation, the
documents and instruments creating and governing the condominium
for the Building Complex, if applicable.
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(d)
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If
the Landlord’s work in connection with making the Premises
Ready for Occupancy shall not be in compliance with applicable law
for a period of ten (10) days after either Tenant has notified
Landlord of such circumstances or Landlord otherwise is made aware
of the circumstances, or such additional time as may be required
due to acts of Tenant’s Parties or acts of god, force
majeure, casualty damage, strikes, shortages of labor or materials,
or other causes beyond Landlord’s reasonable control, then
(i) Landlord shall, within ten (10) days of its receipt
of such notice of non-compliance, either make such repair or, if
the repair cannot reasonably be completed within such ten-day
period, promptly commence the repair within such period and
thereafter diligently pursue same to completion, and (ii) if
Tenant is unable to and does not use the Premises in its entirety
as a result of such violation, Base Rent hereunder shall thereafter
be abated until such time as such violation has been corrected or
Tenant begins using the Premises again, whichever shall first
occur.
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7.
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Services and
Utilities:
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(a)
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Landlord agrees to provide
janitorial services for the Premises in accordance with
specifications and hours to be agreed upon between Landlord and
Tenant. Landlord shall cause electric current, water and sewer and
natural gas to be supplied to the Premises and measured by separate
meters, with one meter for each utility. Landlord shall furnish
such snow removal services to the Premises as may, be reasonably
required by Tenant.
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(b)
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Tenant hereby agrees to pay all
charges with respect to electrical service furnished to or used
within the Premises as and when due to such electrical
provider.
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(c)
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Tenant agrees that Landlord shall
not be liable for failure to supply any heating, air conditioning,
electrical, janitorial, lighting or other services during any
period when Landlord uses reasonable diligence to supply such
services, or during any period Landlord is required to reduce or
curtail such services pursuant to any applicable laws, rules or
regulations, now or hereafter in force or effect, it being
understood that Landlord may discontinue, reduce or curtail such
services, or any of them (either temporarily or permanently), at
such times as it may be necessary by reason of accident,
unavailability of employees, repairs, alterations, improvements,
strikes, lockouts, riots, acts of God, application of applicable
laws, statutes, rules and regulations, or due to any other
happening beyond the control of Landlord. In the event of any such
interruption, reduction or discontinuance of Landlord’s
services (either temporary or permanent), except for the abatement
described below,
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Landlord shall
not be liable for damages to persons or property as a result
thereof, nor shall the occurrence of any such event in any way be
construed as an eviction of Tenant or cause or permit an abatement,
reduction or setoff of rent, or operate to release Tenant from any
of Tenant’s obligations hereunder.
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Notwithstanding the foregoing, if
any utilities are interrupted or discontinued due solely to the
negligence of Landlord for a period of ten (10) days after
Tenant has notified Landlord of such interruption, or such
additional time as may be required due to acts of Tenant’s
Parties or acts of god, force majeure, casualty damage, strikes,
shortages of labor or materials, or other causes beyond
Landlord’s reasonable control, and Tenant is unable to and
does not use, the Premises in its entirety as a result of such
interruption or discontinuance, Base Rent hereunder shall
thereafter be abated until such time as such utilities are restored
or Tenant begins using the Premises again, whichever shall first
occur.
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(d)
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Whenever heat generating machines or
equipment or excessive lighting (i.e., that which exceeds the
typical lighting level used by office tenants in the area in which
the Building is located) are used by Tenant in the Premises which
affect the temperature otherwise maintained by the air conditioning
system, Landlord reserves the right to install supplementary air
conditioning units in the Premises in the event Landlord’s
independent consulting engineer determines same are reasonably
necessary as a result of Tenant’s use of lights or equipment
which generate heat loads in excess of those for which the HVAC
system is designed and the cost therefor, including the cost of
installation, operation and maintenance thereof, shall be prepaid
by Tenant to Landlord upon demand by Landlord.
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Landlord
warrants and agrees to defend Tenant in the quiet enjoyment and
possession of the Premises from any acts of the Landlord, and all
parties claiming by or through the Landlord, during the term of
this Lease so long as Tenant complies with the provisions hereof.
In the event of any transfer or transfers of Landlord’s
interest in the Premises or in the real property of which the
Premises are a part, other than a transfer for security purposes
only, the transferor shall be automatically relieved of any and all
obligations and liabilities on the part of Landlord accruing from
and after the date of such transfer.
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9.
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Maintenance and
Repairs:
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(a)
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Subject to reimbursement as a part
of Operating Expenses, Landlord shall make all necessary repairs
and replacements to the heating, air conditioning and electrical
systems located in the Building, and to the common areas, including
parking areas, and Landlord shall also make all repairs to the
Premises which are structural in nature; provided, however, that
Tenant shall make all repairs and replacements arising from its
act, neglect or default and that of its agents, servants, invitees
and employees.
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In
the event that the Landlord shall deem it necessary, or be required
by any governmental authority to repair, alter, remove, reconstruct
or improve any part of the Premises or of the Building (unless the
same result from Tenant’s act, neglect, default or mode of
operation in which event Tenant shall make all such repairs,
alterations and improvements), such work shall be at
Landlord’s sole cost and expense if due to a violation of law
if such law existed on or before the Commencement Date or as a part
of Operating Expenses if due to the adoption of a law or an
amendment to law after the Commencement Date, then the same shall
be made by Landlord with reasonable dispatch, and should the making
of such repairs, alterations or improvements cause any interference
with Tenant’s use of the Premises, such interference shall
not relieve Tenant from performance of its obligations
hereunder.
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Notwithstanding the foregoing, if
the Landlord fails to make repairs due solely to the negligence of
Landlord for a period of ten (10) days after Tenant has
notified Landlord of such disrepair, or such additional time
as
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may be required
due to acts of Tenant’s Parties or acts of god, force
majeure, casualty damage, strikes, shortages of labor or materials,
or other causes beyond Landlord’s reasonable control, and
Tenant is unable to and does not use, the Premises in its entirety
as a result of such repair issue, Base Rent hereunder shall
thereafter be abated until such time as such repair is completed or
Tenant begins using the Premises again, whichever shall first
occur.
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(b)
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Landlord, at Tenant’s sole
cost and expense as a part of Operating Expenses, except as
excluded from such definition above, shall maintain the Premises in
good order, condition and repair including the interior surfaces of
ceilings, walls and floors, all doors, and interior glass
partitions or glass surfaces. Landlord shall have no liability to
Tenant for any damage, inconvenience or interference with the use
of the Premises by Tenant as a result of performing any such
work.
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(c)
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Landlord and Tenant shall each do
all acts required to comply with all applicable laws, ordinances,
regulations and rules of any public authority relating to their
respective maintenance obligations as set forth herein.
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10.
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Alterations and
Additions:
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(a)
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Tenant shall make no alterations,
additions or improvements to the Premises (each an
“Alteration”) or any part thereof without obtaining the
prior written consent of Landlord; provided, however, Tenant shall
be entitled to make cosmetic, non-structural alterations,
additions, modifications and improvements to the Premises, not
exceeding $50,000 in each instance, which do not materially
adversely affect the Building systems without the requirement of
Landlord’s consent, but with notice to Landlord. Neither
Landlord consent nor notice to Landlord shall be needed to inspect,
install, repair, remove or replace, from time to time,
Tenant’s FF&E. Landlord may impose, as a condition to the
aforesaid consent, such requirements as Landlord may deem necessary
in its reasonable judgment including, without limitation, the
manner in which the work is done, a right to require Tenant to use
Landlord’s contractor and the times during which it is to be
accomplished, provided that Tenant shall not be required to use
Landlord’s contractor to the extent such work involves only
Tenant’s FF&E and, with respect to all other Alterations,
if performed by the Landlord’s contractor, the Landlord shall
follow the same procedures it is required to follow when making the
Premises Ready for Occupancy pursuant to the provisions of
paragraph 20 hereof. In the event that Tenant is entitled to
construct the Expansion, such Expansion will not require a separate
approval by the Landlord under this subparagraph 10(a), subject to
Tenant’s compliance with the other terms of this paragraph
and the provisions of this Lease. Tenant further agrees not to
connect with Building systems, including electric wires, water
pipes, fire safety and mechanical systems, any apparatus, machinery
or device without the prior written consent of Landlord.
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(b)
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All
Alterations (whether performed with or without Landlord’s
consent as provided herein), shall be deemed a part of the real
estate and the property of Landlord and shall remain upon and be
surrendered with the Premises as a part thereof without
molestation, disturbance or injury at the end of said Term, whether
by lapse of time or otherwise, unless Landlord notifies Tenant
otherwise, in which event Tenant shall promptly remove, at its sole
cost and expense, such alterations and additions and restore the
Premises to their condition prior to the making of the same,
reasonable wear and tear excepted. All such removal, whether
required or permitted by Landlord, shall be at Tenant’s sole
cost and expense, and Tenant shall restore the Premises to the
condition in which the Premises were prior to the making of the
same, reasonable wear and tear excepted. All Tenant’s
FF&E including any movable partitions, machines and equipment
which are installed in the Premises by or for the account of
Tenant, without expense to Landlord, and can be removed without
permanent structural damage to or defacement of the Building or the
Premises, and all furniture, furnishings and other articles of
personal property owned by Tenant and located in the Premises (all
of which are herein called “Tenant’s Property”),
shall be and remain the property of
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Tenant and may be removed by it at
any time during the Term of this Lease. However, if any of
Tenant’s Property is removed, Tenant shall repair or pay the
cost of repairing any damage to the Building or the Premises
resulting from such removal. All additions or improvements which
are to be surrendered with the Premises shall be surrendered with
the Premises, as a part thereof, at the end of the Term or the
earlier termination of this Lease.
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(c)
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If
Landlord authorizes persons requested by Tenant to perform any
Alterations or repairs to the Premises, then prior to the
commencement of any such work, Tenant shall, on request of
Landlord, deliver to Landlord certificates issued by insurance
companies qualified to do business in the State of Michigan
evidencing that Workers’ Compensation, public liability
insurance and property damage insurance, all in amounts, with
companies and on forms reasonably satisfactory to Landlord, are in
force and effect and maintained by all such contractors and
subcontractors engaged by Tenant to perform such work. All such
policies shall name Landlord as an additional insured. Each such
certificate shall provide that the same may not be cancelled or
modified without thirty (30) days’ prior written notice
to Landlord.
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(d)
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Tenant, at its sole cost and
expense, shall cause any permitted Alterations, decorations,
installations, additions or improvements in or about the Premises
to be performed in compliance with all applicable requirements of
insurance bodies having jurisdiction, and in such manner as not to
interfere with, delay, or impose any additional expense upon
Landlord in the construction, maintenance or operation of the
Building, and so as to maintain harmonious labor relations in the
Building.
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Landlord
and its agents shall have the right to enter the Premises at all
reasonable times and upon reasonable notice for the purpose of
examining or inspecting the same, to supply any services to be
provided by Landlord for Tenant hereunder, to show the same to
prospective purchasers of the Building, to make such alterations,
repairs, improvements or additions to the Premises or to the
Building of which they are a part as Landlord may deem necessary or
desirable, and to show the same to prospective tenants of the
Premises (provided that in the event of a bona fide emergency,
Landlord may enter the Premises without advance notice solely for
the purpose of taking emergency action). Tenant shall have the
right to exclude Landlord from entering into portions of the
Premises which include proprietary information or trade secrets
unless Landlord shall have signed a confidentiality ag
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